1. Bank of America
First Quarter 2009 Results
Ken Lewis
Chairman, CEO and President
Joe Price
Chief Financial Officer
April 20, 2009
2. Forward Looking Statements
Bank of America and its management may make certain statements that constitute “forward-looking statements”
within the meaning of the Private Securities Litigation reform Act of 1995. These statements are not historical
facts, but instead represent Bank of America’s current expectations, plans or forecasts of its future earnings,
integration of acquisitions and related cost savings, loan modifications, investment bank rankings, loan and
deposit growth, mortgage originations and market share, credit losses, credit reserves and charge-offs,
consumer credit card net loss ratios, tax rates, payments on mortgage backed securities, global markets
originations and trading and other similar matters. These statements are not guarantees of future results or
performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often
beyond Bank of America’s control. Actual outcomes and results may differ materially from those expressed in,
or implied by, any of these forward looking statements.
You should not place undue reliance on any forward-looking statement and should consider all of the following
uncertainties and risks, as well as those more fully discussed under Item 1A. “Risks Factors” of Bank of
America’s 2008 Annual Report on Form 10-K and in any of Bank of America’s subsequent SEC filings: negative
economic conditions; the level and volatility of the capital markets, interest rates, currency values and other
market indices; changes in consumer, investor and counterparty confidence; Bank of America’s credit ratings
and the credit ratings of its securitizations; estimates of fair value of certain of Bank of America’s assets and
liabilities; legislative and regulatory actions in the United States and internationally; the impact of litigation and
regulatory investigations, including costs, expenses, settlements and judgments; various monetary and fiscal
policies and regulations of the U.S. and non-U.S. governments; changes in accounting standards, rules and
interpretations; increased globalization of the financial services industry and competition with other U.S. and
international financial institutions; Bank of America’s ability to attract new employees and retain and motivate
existing employees; mergers and acquisitions and their integration into Bank of America; Bank of America’s
reputation; and decisions to downsize, sell or close units or otherwise change the business mix of Bank of
America.
Forward-looking statements speak only as of the date they are made, and Bank of America undertakes no
obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise
after the date the forward-looking statement was made.
2
3. Important Presentation Format Information
• Certain prior period amounts have been reclassified to conform
to current period presentation
• This information is preliminary and based on company data
available at the time of the presentation
3
4. Summary
• 1Q09 net income of $4.2 billion
• Diluted EPS of $0.44 after preferred dividends
• Record revenue and pre-tax pre-provision earnings of $36.1 billion and $19.1 billion on a fully taxable-
equivalent basis
• First quarter results include Merrill Lynch
• Global Markets reported record results including the absorption of $1.7 billion in capital markets disruption
charges
• Mortgage banking income of $3.3 billion driven by Countrywide and favorable interest rate environment
– Home loan production of $89 billion increased 79% from 4Q08 and 131% from 1Q08
• 1Q09 included the following items, all recorded in our corporate treasury/other unit:
– $1.9 billion pre-tax gain on sale of partial ownership in China Construction Bank
– $2.2 billion pre-tax FVO positive adjustment on Merrill Lynch structured notes
– $1.5 billion pre-tax gain on sale of debt securities
• Given the credit losses resulting from the deteriorating economy the company strengthened reserves for
loan losses by $6.4 billion in the quarter, now covers 3% of loans
– Allowance for credit losses, including reserve for unfunded lending commitments stands at $30.4
billion
– Net charge-offs of $6.9 billion and provision expense of $13.4 billion
• Global Markets balance sheet reduced $149 billion or 21% in 1Q09 from proforma levels at the end of
December
• Retail deposits showed strong growth momentum at the end of the quarter
• Credit extended in the quarter totaled $183 billion
• Tangible common equity ratio improved to 3.13% and a strong Tier 1 ratio at 10.1%
• Liquidity was enhanced as deposit levels were steady and cash and cash equivalents increased to end the
quarter at $173 billion
• Company continues to successfully operate in a tough economic environment
• Addition of market sensitive businesses helping to weather the current environment
4
5. Consolidated Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ 2,528 $ (587)
$ 12,819
Noninterest income 16,181 20,687
23,261
Total revenue, net of interest expense (FTE) 18,709 20,100
36,080
Provision for credit losses 7,370 4,845
13,380
Noninterest expense 7,739 6,055
17,002
Pre-tax income 3,600 9,200
5,698
Income tax expense (FTE) 563 3,164
1,451
Net income $ 3,037 $ 6,036
$ 4,247
Preferred stock dividends 1,243 830
1,433
Net income applicable to common shareholders $ 1,794 $ 5,206
$ 2,814
Diluted EPS $ 0.21 $ 0.92
$ 0.44
After tax effect of merger charge 497 398
604
Return on common equity N/M N/M
7.10 %
Tangible return on equity N/M N/M
12.41
• 1Q09 reflects $19.1 billion in pre-tax pre-provision earnings
• 1Q09 results include $10.0 billion in revenue and $4.7 billion in expense from the addition of Merrill Lynch
• Global Markets reported record results including the absorption of $1.7 billion in capital markets disruption charges
• Record mortgage banking income of $3.3 billion driven by Countrywide and favorable interest rate environment
Home loan production of $89 billion increased 79% from 4Q08 and 131% from 1Q08
–
• 1Q09 included the following items, all recorded in our corporate treasury/other unit:
– $1.9 billion pre-tax gain on sale of partial ownership in China Construction Bank
– $2.2 billion pre-tax FVO positive adjustment on Merrill Lynch structured notes
– $1.5 billion gain on sale of debt securities
• 1Q09 provision expense of $13.4 billion includes $6.4 billion reserve build
$4.8 billion increase in provision expense over 4Q08 result of $1.4 billion increase in charge-offs and $3.4 billion increase
–
in reserve build
5
6. Bank of America Addressing Economic Issues
• Remain committed to customers and clients during the economic stress
• Continue to support government efforts in stabilization
– Credit markets
– Home ownership
– Consumer financial health
– Commercial business stability
• Examples include:
– Loan modification program projected to modify $100 billion or more home loans over 3 years and keep
630,000 borrowers in homes
– Currently have 6,400 associates working in home retention
– During 1Q09 Bank of America completed nearly 119,000 modifications
• Lending is our business and we are extending credit
– $183 billion of credit extensions, including renewals, during the quarter:
• $ 85 billion first mortgages
• $ 71 billion commercial non-real estate
• $ 11 billion commercial real estate
• $ 16 billion other consumer and small business loans
6
7. 2009 Segment Reporting Changes
2008 Reporting Segments 2009 Reporting Segments
& Related Businesses
Deposits
Deposits and
Global Consumer &
Student Lending
Small Business
Debit card 1 results now (Liam McGee)
reported as a payment product
Banking
in Global Card Services
Card Services
Global Card Services
(Ric Struthers)
Mortgage, Home
Equity and
Insurance
Home Loans & Insurance
Investment Banking
Global Corporate &
Business Lending
(Barbara Desoer)
Treasury Services Investment banking results now
recorded in Global Banking and Global Banking
Global Markets based on an
internal fee sharing arrangement
Capital Markets (Brian Moynihan)
and Advisory
Services
Global Markets
Premier Banking
(Tom Montag)
Global Wealth &
and Investments
Management
Investment
Columbia
Management GWM
(Brian Moynihan)
US Trust
1 Debit Card results are included in Global Card Services and prior period amounts have been reclassified to conform to
7
the current period presentation.
8. Deposits Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ (610) $ (1,087)
$ 1,962
Noninterest income (76) (184)
1,502
Total revenue, net of interest expense (FTE) (686) (1,271)
3,464
Noninterest expense 147 110
2,363
Pre-tax pre-provision for credit loss income $ (833) $ (1,381)
$ 1,101
Provision for credit losses $ 65 $ 76
$ 311
Net income (loss) $ (567) $ (1,015)
$ 493
Key Stats • Deposits net income was down $1.0 billion from 4Q08
Total retail households 55 million
• Lower net interest income was primarily a result of allocations driven
Online banking customers 30 million
by interest rate risk and liquidity actions related to our ALM
Banking stores 6,145
activities, and to a smaller extent, spread compression on money
ATMs (branded) 18,532
market deposits
States in footprint 32
Ending retail deposits 1 • Continuing to drive deposit growth
$ 669 billion
• New sales initiatives like “Go America Save” and others
driving growth
• Affinity sales represent 37% of checking sales in 1Q
• Noninterest income includes lower service charges from prior
periods due to both seasonality and changes in consumer spending
behavior
1 Retail deposits include GWM deposits and certain deposits from Global Banking and All Other
8
9. Retail Deposits Growth Remains Steady
1
Bank of America Retail Deposits
1Q09 vs
1Q08 2Q08 3Q08 4Q08 1Q09 1Q08 4Q08
Average ($in billions)
Retail
Legacy Bank of America $ 521.8 $ 529.4 $ 537.4 $ 556.2 $ 554.5 6% 0%
Legacy Merrill Lynch 81.2
Legacy Countrywide 38.7 31.6 26.1 -17%
Total Retail $ 521.8 $ 529.4 $ 576.1 $ 587.8 $ 661.8 27% 13%
1Q09 vs
1Q08 2Q08 3Q08 4Q08 1Q09 1Q08 4Q08
End of Period ($in billions)
Retail
Legacy Bank of America $ 534.5 $ 529.9 $ 550.8 $ 559.7 $ 562.8 5% 1%
Legacy Merrill Lynch 82.5
Legacy Countrywide 35.4 28.6 23.6 -17%
Total Retail $ 534.5 $ 529.9 $ 586.2 $ 588.3 $ 668.9 25% 14%
• Average retail deposits are up $140 billion from 1Q08
• Legacy Bank of America deposits grew 6%
• Legacy Countrywide balances have been declining, as expected, as pricing strategies are being aligned
with Legacy Bank of America
• Merrill Lynch retail deposits have increased $4 billion since acquisition date
• Period end balances reflect strong momentum entering the second quarter
1 Retail deposits include GWM deposits and certain deposits from Global Banking and All Other
9
10. Global Card Services Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ 680 $ (30)
$ 5,207
Noninterest income (1,091) (458)
2,250
Total revenue, net of interest expense (FTE) (411) (488)
7,457
Noninterest expense (124) (103)
2,075
Pre-tax pre-provision for credit loss income $ (287) $ (385)
$ 5,382
Provision for credit losses $ 3,909 $ 2,498
$ 8,221
Net income (loss) $ (2,636) $ (1,795)
$ (1,769)
Key Stats
• Global Card Services recorded a net loss of $1.8 billion driven by
higher credit costs in credit card, consumer lending and small ($ in Millions; Accounts in Thousands)
business and as well as lower spending levels
Managed Credit Card Data 1Q09 4Q08
• Retail volume is down seasonally 9% from 4Q08 and 10% from 1Q08 Gross interest yield 11.68% 11.87%
from the economic effect of lower consumer spending levels Risk adjusted margin 4.65% 6.47%
• Asset quality continued to deteriorate as unemployment levels rose New account growth 1,226 1,432
Managed losses were up $759 million or 17% from 4Q08
– Purchase volumes 48,056 56,585
Reserve build of $2.9 billion in 1Q09 increased $1.7 billion
–
Debit Card Data
from 4Q08
Debit purchase volumes 51,133 52,925
• Ending loans of $218 billion are down 5% from both periods. The
linked quarter decline is driven by seasonality
• Unused commitments were reduced over $200 billion or 26% in the
quarter, principally on inactive accounts
10
11. Home Loans & Insurance Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q09 1Q08 4Q08
Net interest income (FTE) $ 1,180 $ 581 $ 161
Noninterest income 4,044 3,271 1,797
Total revenue, net of interest expense (FTE) 5,224 3,852 1,958
Noninterest expense 2,650 1,928 (84)
$ 2,574
Pre-tax pre-provision for credit loss income $ 1,924 $ 2,042
(1)
$ 3,372 $ 1,560 $ 1,749
Provision for credit losses
Net income (loss) $ (498) $ 234 $ 189
Key Stats • Home Loans & Insurance net income improved $189 million to net loss
($ in billions) 1Q09 4Q08 of $498 million, despite an increase in provision for credit losses of
Total Corp Home Loan Originations $1.7 billion
First Mortgage 85.2 44.6
– Mortgage banking income increased $1.8 billion
Home Equity 4.0 5.3
• Production revenue increased $946 million due to favorable
volume and margins driven by the reduced interest rate
MSR, Ending Balance 14.1 12.7
environment
Capitalized MSR, bps 83 77
Serviced for Others, EOP 1,699 1,654 • Servicing income increased $854 million primarily due to
favorable performance of MSRs
– Provision expense of $3.4 billion increased $1.7 billion from 4Q08
• Net charge-offs increased $516 million from 4Q08
• Reserve build of $1.9 billion increased $1.2 billion over 4Q08
including an increase in the allowance for impaired loans
Provision expense in this segment only represents home equity provisioning as the majority of residential mortgages
1
utilized by our treasury group in managing the interest rate risk of the company are included in All Other
11
12. Global Wealth Management Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ 635 $ 310
$ 1,653
Noninterest income 1,784 2,066
2,708
Total revenue, net of interest expense (FTE) 2,419 2,376
4,361
Noninterest expense 1,974 2,215
3,288
Pre-tax pre-provision for credit loss income $ 445 $ 161
$ 1,073
Provision for credit losses $ 11 $ 102
$ 254
Net income $ 268 $ 1
$ 510
• GWM reported net income of $510 million as the impact of the acquisition of Merrill Lynch was offset by lower
revenue and increased provision expense
Aside from adding Merrill Lynch revenues in the quarter, net interest income was pressured as a result
–
of allocations driven by interest rate risk and liquidity actions related to our ALM activities , and to a
lesser extent, spread compression on money market deposits
Investment and brokerage services adversely impacted by lower valuations in the equity markets
–
Assets under management began the quarter at $769 billion, after adding $246 billion from Merrill
–
Lynch, but declined to $697 billion during the quarter
1Q09 experienced $43 billion negative net flows and $29 billion from market valuation decline
•
$43 billion of negative flows was primarily cash as equity and fixed income flows were stable
•
Financial advisor headcount ended the quarter at just under 16,000 with the addition of Merrill Lynch
–
95% of all high producers have been retained
•
During the quarter the headcount was reduced by roughly 2,000 associates driven by
•
reductions in trainees and lower producing advisors
Support of cash funds of $117 million in 1Q09 was $109 million lower than 4Q08
–
Higher expenses driven primarily by the addition of Merrill Lynch
–
Provision expense driven by home equity reserve build and losses
–
12
13. Global Banking Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ 512 $ (279)
$ 2,810
Noninterest income 273 910
1,831
Total revenue, net of interest expense (FTE) 785 631
4,641
Noninterest expense 771 1,395
2,511
Pre-tax pre-provision for credit loss income $ 14 $ (764)
$ 2,130
Provision for credit losses $ 1,322 $ 446
$ 1,848
Net income (loss) $ (825) $ (866)
$ 175
• Global Banking net income of $175 million decreased $866 million compared to 4Q08
– Revenue increase of $631 million includes:
Addition of Merrill Lynch representing approximately $800 million
•
Net interest income negatively impacted by the current rate environment
•
– Expense increase of $1.4 billion includes:
Addition of Merrill Lynch representing approximately $425 million
•
Lower incentives in 4Q08
•
– Provision increased $446 million
Net charge-offs increased $130 million
•
1Q09 reserve build of $726 million was up $316 million from 4Q08 (primarily within commercial real
•
estate and retail dealer related portfolios)
– Average loans, after adjusting for loans to Merrill Lynch, were down modestly compared to 4Q08
– Deposits, on average, were stable
13
14. Investment Banking Fees - 1Q09
Investment Banking and Global Markets Investment Banking Fees
quot;Pooledquot; 1
($ in millions) Reported Increase (decrease) over
quot;Pooledquot; 1
4Q08 4Q08 Reported
1Q09
Merger & Advisory fees $ 107 $ 375 $ 183 $ (85)
$ 290
Debt underwriting
Investment grade 135 241 160 54
295
Leveraged finance 160 193 9 (24)
169
Other 134 220 46 (40)
180
Total Debt underwriting 429 654 215 (10)
644
Equity underwriting 224 545 (57) (378)
167
Total Investment Banking Fees $ 760 $ 1,574 $ 341 $ (473)
$ 1,101
• Investment banking fees in 1Q09 were up $341 million from 4Q08 as lower market fee pools were offset by
the addition of Merrill Lynch
• From a “pooled view” versus 4Q08, fees were down primarily in equities as the IPO market and average deal
size shrunk
• Bank of America Merrill Lynch was No. 2 in global and U.S. investment banking fees during 1Q09
• Bank of America Merrill Lynch was No. 1 based on volume in:
• U.S. equity capital markets
• U.S. high yield debt, leveraged and syndicated loans
• A top-five advisor on mergers and acquisitions globally and in the U.S.
• Lead advisor and/or underwriter in many well known deals announced during the quarter
Source for rankings – Dealogic
1 “Pooled” represents fees from the two legacy companies in 4Q08
14
15. Global Markets Highlights - 1Q09
Increase (decrease) over
($ in millions)
1Q08 4Q08
1Q09
Net interest income (FTE) $ 654 $ 259
$ 1,787
Noninterest income 6,985 11,115
5,004
Total revenue, net of interest expense (FTE) 7,639 11,374
6,791
Noninterest expense 2,333 1,956
3,059
Pre-tax pre-provision for credit loss income $ 5,306 $ 9,418
$ 3,732
Provision for credit losses $ 52 $ 38
$ 51
Net income $ 3,356 $ 6,034
$ 2,365
• Global Markets experienced a record quarter in earnings driven by the acquisition of Merrill Lynch
• Balance sheet reduced $149 billion or 21% on a proforma basis
• Global Markets net income increased $6.0 billion to $2.4 billion in 1Q09 compared to a net loss of $3.6
billion in 4Q08 due to favorable trading results and the acquisition of Merrill Lynch, including:
– Liquid products benefited from increased market volatility during January and February
– The Mortgage trading platform performed favorably as well as the Equity platforms
– Decrease in market-based disruption charges, including CDO, CMBS and leveraged finance-
related losses as 1Q09 capital market disruption charges were $1.7 billion compared to $4.6
billion in 4Q08
15
16. Global Markets Sales & Trading Revenue - 1Q09
($ in millions) 1Q09 Increase (decrease)
1
Sales & Trading over 4Q08
Rates and Currencies $ 3,555 $ 3,374
Commodities 536 490
Credit Products 890 3,079
Structured Products (400) 3,453
Total Fixed Income 4,581 10,396
Equities 1,402 1,420
2
$ 5,983 $ 11,816
Total
1 Includes $1.7 billion of market disruption charges in 1Q09 versus $4.6 billion in 4Q08
2 Excludes $58 million and $35 million margin from FVO loan book for 1Q09 and 4Q08
16
17. Key Capital Markets Risk Exposures – 1Q09
Leveraged Loans
• Funded commitments carried at $4.4 billion or 52% of gross value
– 1Q09 markdown of $98 million
– Pre-market disruption exposure carried at $3.1 billion or 45% of gross value
– On a “pooled basis” total Bank of America and Merrill Lynch exposure in June of
2007 was $85 billion
Capital Markets Commercial Mortgage related
• Total commitments carried at $7.3 billion with $6.4 billion funded
– 1Q09 markdown of $174 million predominantly floating rate positions
– Carrying approximately $5.5 billion of acquisition related large floating rate loans
at roughly 75% of gross value
– 1Q09 markdown of $150 million on equity positions on acquisition related
exposures
– Additionally, $3.8 billion of loans associated with the Merrill Lynch acquisition
were transferred to the accrual book at 82%
17
18. Key Capital Markets Risk Exposures – 1Q09
Super Senior CDO related
Total
($ in millions)
Retained Total Super Senior
Subprime Positions Subprime Non subprime CDO
Hedged $ 1,174 $ - $ 1,174 $ 854 $ 2,028
Unhedged 1,361 1,824 3,185 1,950 5,135
Total $ 2,535 $ 1,824 $ 4,359 $ 2,804 $ 7,163
• 1Q09 markdown of $525 million includes monoline insurance marks
• $3.2 billion unhedged subprime exposure including retained bonds carried at 25%
• $1.2 billion hedged subprime exposure carried at 15%
• $1.95 billion unhedged non-subprime exposure carried at 65%
Credit Default Swaps with Monoline Financial Guarantors
Super Senior Other guaranteed
($ in millions)
CDOs Positions
Notional $ 5,592 $ 55,898
Mark to market or guarantor receivable 4,199 14,731
Credit Valuation Adjustment (2,513) (6,003)
Net mark to market of receivable 1,686 8,728
Carry value % 60% 41%
1Q09 writedown (259) (960)
• Super senior CDO wrap notional of $5.6 billion
– $4.2 billion receivable with a 60% reserve
– 1Q09 markdown of $259 million
• Other guaranteed exposure notional of $56 billion
– $14.7 billion receivable with a 41% reserve
18
– 1Q09 markdown of $960 million
19. Asset Quality – Held Basis*
($ in millions) 1Q09 Increase from 4Q08 in
Net charge-offs Reserve Build Provision Net charge-offs Reserve Build Provision
Residential mortgage $ 785 $ 1,134 $ 1,919 $ 319 $ 1,120 $ 1,439
Home Equity 1,681 643 2,324 568 59 627
Credit Card 1,612 1,542 3,154 206 986 1,192
Consumer lending 921 775 1,696 176 320 496
Countrywide impaired - 853 853 - 103 103
Other consumer 440 254 694 (12) 70 58
Total Consumer 5,439 5,201 10,640 1,257 2,658 3,915
Small business 633 675 1,308 71 479 550
Commercial Real Estate 455 290 745 73 201 274
Other Commercial 415 244 659 - 72 72
Total Commercial 1,503 1,209 2,712 144 752 896
Unfunded lending commitments - 28 28 - 34 34
Total 6,942 6,438 13,380 1,401 3,444 4,845
• Credit quality deteriorated further during the quarter as the impacts of the recessionary environment worsened.
Consumers continued to experience high levels of stress from depreciating home prices, rising unemployment and
underemployment
• The commercial portfolio losses were impacted by small business and deterioration in the commercial real estate portfolio.
Although losses did not increase outside of commercial real estate, the commercial portfolio did see an increase in
criticized exposure and nonperforming loans from the widespread effects of the economy
• Held net charge-offs increased to 2.85%, up 49 basis points from 4Q08
• Managed net losses increased to 3.40%, up 56 basis points from 4Q08
• Allowance for loan losses covers 3% of loans and, including the reserve for unfunded commitments, is $30.4 billion
* Schedule reflects a held basis. Managed losses would add $2,182 in 1Q09, an increase of $325 million from 4Q08
19
20. Consumer Credit Card Asset Quality
Ending Managed Balances and Net Loss Ratios Unemployment Rates
$173.4
$225 10% 10.0%
8.5%
$182.2
$187.2
($ in billions)
$200 $183.8 $183.4 8%
8.6% 7.2%
8.0%
$175 7.2% 6.2%
5%
6.4%
6.0% 5.6%
$150 5.2% 5.1%
6.0% 4.9%
4.7%
4.6%
3%
$125
4.0%
$100 0%
1Q08 2Q08 3Q08 4Q08 1Q09
2.0%
2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09
End bal. Net loss ratio
Consumer Credit Card – Managed Basis 1
• Net losses increased $531 million to $3.8 billion as the loss ratio climbed 146 basis points to 8.62%
– US credit card portfolio refreshed FICO of 681 while originated average FICO was 761 in 1Q09
– California and Florida represent 24% of balances but 34% of managed losses
– Losses impacted by unemployment and remain higher in geographies of housing stress
• 30+ delinquencies increased 117 basis points to 7.85% of loans
• 90+ delinquencies increased 83 basis point to 3.99% of loans
• Unused commitments were reduced over $200 billion in 1Q09, principally on inactive accounts
1 Credit Card includes U.S. consumer, Europe and Canada credit card
20
21. Home Loan Asset Quality
Ending Residential Mortgage Balances and Ending Home Equity Balances and
Net Charge-off Ratios $200 5%
Net Charge-off Ratios
$300 2%
$157.6
$266.1 $261.6 $152.5
$151.8
$257.1
$248.1
$150 4.3%
$235.5
($ in billions)
($ in billions)
1.20% $121.4
$118.4
3.1%
$100 3%
$200 1% 2.9%
0.73%
2.5%
0.37% $50 1.7%
0.24%
0.10%
$0 0%
$100 0%
1Q08 2Q08 3Q08 4Q08 1Q09
1Q08 2Q08 3Q08 4Q08 1Q09
End bal. Net charge-off ratio
End bal. Net charge-off ratio
Residential Mortgage Home Equity
• Net charge-offs increased $319 million to $785 million • Net charge-offs increased $568 million to $1.7 billion
as the loss ratio climbed 47 basis points to 1.20% as the loss ratio climbed 138 basis points to 4.30%
– Adjusted for the expected benefit of Resi Wrap – Loans with >90% RCLTV represent 42% of
protection, the loss rate would be 0.95% portfolio reflecting home price deterioration
– CRA portfolio still drove a disproportionate share – CA and FL represent 41% of the portfolio but
of losses (7% of loans with 4.4% loss rate) 61% of losses
– Loans with >90% RLTV represented 25% of the • Allowance covers 4.73% of loans
portfolio reflecting home price deterioration • Nonperforming loans increased $928 million from
– CA and FL represented 43% of the portfolio but 4Q08 and now represents 2.28% of loans
59% of losses • 30+ performing past dues declined slightly 1Q09
• Allowance covers 1.09% of loans compared to 4Q08 and the ratio to loans declined
7 bps to 1.68%
• Nonperforming loans increased $3.8 billion from 4Q08
and now represents 4.13% of loans. The increase was
driven by the performance of 2006/2007 vintages
• 30+ performing past dues were flat compared to 4Q08
but, with loan balance increases, the ratio declined 17
bps to 3.04% of loans
21
22. Direct/Indirect
Ending Consumer Lending Balances and
Ending Direct/Indirect Balances and
Net Charge-off Ratios $26.6
Net Charge-off Ratios $40 15%
$125 6%
$83.4 $99.7 13%
$28.6
$28.4 $28.2
$100 5% 13.5%
$30
$84.9 $26.2
$82.8
($ in billions)
($ in billions)
$80.2 5.0% 5.0% 10%
8.4%
$75 4% 7.1% 10.4%
3.9% $20 8%
5.7%
$50 3%
3.2%
2.8% 5%
$10
$25 1%
3%
$0 0% $0 0%
1Q08 2Q08 3Q08 4Q08 1Q09 1Q08 2Q08 3Q08 4Q08 1Q09
End bal. Net charge-off ratio End bal. Net charge-off ratio
Direct/Indirect Loans Consumer Lending (part of Direct/Indirect)
• Ending loans included $17 billion increase from • Consumer Lending portfolio of $26.6 billion had a
adding Merrill Lynch securities based lending 316 basis point increase in loss rate to 13.53%
• Net charge-offs increased $195 million to $1.2 billion • Allowance was increased to cover 15.9% of loans
as the loss ratio remained flat at 5.03% (up 100bps
excluding Merrill Lynch)
– Driven by Consumer Lending and Dealer
Financial Services from both borrower and
collateral stress
• Allowance was increased to cover 5.40% of loans
• Dealer Finance portfolio of $40.1 billion had a 26
basis point increase in loss rate to 2.78%
– The auto portfolio of $26.7 billion had a 46bps
increase in loss rate to 2.48%
– Includes auto originations, auto purchased
loan portfolios and marine/RV
• 30+ delinquencies decreased 61 basis points to
4.16% of loans (up 24bps excluding Merrill Lynch)
22
23. Consumer Asset Quality Key Indicators
($ in millions)
Residential Mortgage Home Equity Discontinued Real Estate
4Q08 4Q08 4Q08
1Q09 1Q09 1Q09
Excluding Excluding Excluding
Excluding Excluding Excluding
the SOP the SOP the SOP
the SOP the SOP the SOP
03-3 03-3 03-3
03-3 03-3 03-3
As As As
As As As
Portfolio 1 Portfolio 1 Portfolio 1
Portfolio 1 Portfolio 1 Portfolio 1
Reported Reported Reported
Reported Reported Reported
Loans EOP $ 248,063 $ 238,049 $ 152,483 $ 138,384 $ 19,981 $ 1,884
$ 261,583 $ 251,637 $ 157,645 $ 143,754 $ 19,000 $ 2,222
Loans Avg 253,560 244,515 151,943 137,803 21,324 2,189
265,121 255,389 158,575 144,610 19,386 1,885
Net losses $ 466 $ 466 $ 1,113 $ 1,113 $ 19 $ 19
$ 785 $ 785 $ 1,681 $ 1,681 $ 15 $ 15
2
% of avg loans 2 0.73 % 0.76 % 2.92 % 3.22 % 0.36 % 3.48 %
1.20 % 1.25 % 4.30 % 4.71 % 0.31 % 3.15 %
Allowance for loan losses $ 1,382 $ 1,382 $ 5,385 $ 5,219 $ 658 $ 74
$ 2,856 $ 2,856 $ 7,457 $ 5,862 $ 67 $ 59
% of Loans 0.56 % 0.58 % 3.53 % 3.77 3.29 % 3.91
1.09 % 1.14 % 4.73 % 4.08 % 0.35 % 2.66 %
3
Avg. refreshed (C)LTV 71 83 73
74 87 74
90%+ refreshed (C)LTV 3 23 % 37 % 13 %
25 % 42 % 16 %
Avg. refreshed FICO 729 717 697
726 716 687
% below 620 FICO 8% 10 % 17 %
10 % 11 % 25 %
1 Represents the SOP 03-3 portfolio acquired from Countrywide
2 Adjusting for the benefit of Resi Wrap protection, the residential mortgage as reported loss rate would be 0.95% in 1Q09 and 0.62% in 4Q08
3 Loan to value (LTV) calculations applied to the residential mortgage and discontinued real estate portfolio. Combined loan to value (CLTV)
calculations apply to the home equity portfolio
23
24. Consumer Asset Quality Key Indicators (cont’d)
($ in millions)
Total Managed
Other 1
Credit Card Consumer
Held Managed
4Q08 4Q08 4Q08 4Q08
1Q09 1Q09 1Q09 1Q09
Loans EOP $ 81,274 $182,234 $ 86,878 $689,639
$ 67,960 $173,352 $102,992 $714,572
Loans Avg 82,117 181,233 86,875 694,935
75,818 178,490 104,148 725,720
Net losses $ 1,406 $ 3,263 $ 1,178 $ 6,039
$ 1,612 $ 3,794 $ 1,346 $ 7,621
% of avg loans 6.82 % 7.16 % 5.39 % 3.46 %
8.62 % 8.62 % 5.24 % 4.26 %
Allowance for loan losses $ 4,689 $ 4,544 $ 16,658
$ 5,463 $ 5,583 $ 21,426
% of Loans 5.77 % 5.23 % 2.83 %
8.04 % 5.42 % 3.52 %
• The average refreshed FICO for the U.S. Credit Card portfolio was 684 at 4Q08 compared to 681 at 1Q09; the
percentage below 620 FICO was 17% at 4Q08 compared to 19% at 1Q09
1 Other primarily consists of the following portfolios of loans: Consumer Lending and Dealer Financial Services
24
25. Consumer Asset Quality Key Indicators – SOP 03-3 Countrywide Portfolio 1
($ in millions)
Residential
Mortgage Home Equity Discontinued Real Estate
4Q08 4Q08 4Q08
1Q09 1Q09 1Q09
Loans EOP $ 10,014 $ 14,099 $ 18,097
$ 9,946 $ 13,891 $ 16,778
Net losses 202 722 719
264 890 936
• The net losses shown on this table are not included in the net losses reported by the company
as these loans were considered impaired and written down to fair value at acquisition in
accordance with SOP 03-3
• 1Q09 includes an increase in the valuation allowance through provision of $853 million
compared to $750 million in 4Q08
• The carrying value at 03/31/09 of the impaired loan portfolio is 74% of the outstanding
principal balance
1 The table presents outstandings net of purchase accounting adjustments, valuation allowances and net losses
25
27. Commercial Real Estate
Homebuilders
• Homebuilder utilized balances at 1Q09, included in commercial real estate, decreased $294
million to $11.4 billion compared to 4Q08. These utilized balances are included in total
exposure of $15.2 billion
Reservable criticized utilized exposure increased $103 million to $7.7 billion (44% of
–
reservable criticized utilized commercial real estate exposure)
NPAs rose $687 million to $3.7 billion (62% of commercial real estate NPAs)
–
1Q09 charge-offs were $301 million compared to $355 million in 4Q08
–
• Homebuilder construction and land development utilized balances at 1Q09 decreased $512
million to $8.8 billion compared to 4Q08
Reservable criticized utilized exposure increased $251 million to $6.9 billion
–
NPAs rose $615 million to $3.2 billion
–
27
28. Net Interest Income
($ in millions)
4Q08
1Q09 $ Change
Reported net interest income (FTE) $ 13,406
$ 12,819 $ (587)
Impact of securitizations 2,257
2,749 492
Managed net interest income (FTE) 15,663
15,568 (95)
Market-based NII (1,566)
(1,895) (329)
Core NII – Managed Basis $ 14,097
$ 13,673 $ (424)
Average earning assets $ 1,616,673
$ 1,912,483 $ 295,810
Impact of securitizations 93,189
91,567 (1,622)
Market-based earning assets 311,777
488,411 176,634
Reported net interest yield 3.31 %
2.70 % (61) bps
Managed net interest yield 3.65
3.13 (52)
Core net interest yield – Managed Basis 4.02
3.63 (39)
• Merrill Lynch added approximately $750 million to net interest income but negatively impacted the net interest
yield by 27 bps from the addition of low margin assets
$375 million to core (11 bps impact on core yield) and $375 million market based
–
• Higher levels of long term debt cost $200 million and approximately 6 bps in yield
• Lower levels of assets from deleveraging cost $350 million in net interest income
• 2 less days cost $200 million in net interest income and 6 bps in yield
• Sold $51 billion of debt securities to manage prepayment risk resulting in $1.5 billion in gains in 1Q09
• Given the low rate environment the balance sheet position continues to be asset sensitive
28
29. Net Interest Income – Managed Sensitivity
($ in millions) Managed net interest income impact for next 12 months
@ 12/31/08
@ 3/31/09
Forward curve interest rate scenarios
+100 bp parallel shift $ 144
$ 401
- 100 bp parallel shift (186)
(553)
Flattening scenario from forward curve
+ 100 bp flattening on short end (545)
(42)
- 100 bp flattening on long end (638)
(466)
Steepening scenario from forward curve
+ 100 bp steepening on long end 698
440
- 100 bp steepening on short end 453
(91)
29
30. Bank of America
NII Sensitivity on a Managed Basis
First Rolling 12 Months
March 31, 2009
300
Year 1
FF: 2.61%
10-Y: 4.16%
NII ∆: 178
200 NII ∆: 481
Curve Flatteners
FF: 1.61%
10-Y: 3.16%
NII ∆: -42
NII ∆: 401
100
Stable
FF: 0.25%
10-Y: 2.88%
NII ∆: -2,705 FF: 0.61%
Change in Fed Funds
FF: 0.61%
10-Y: 4.16%
10-Y: 2.16%
NII ∆: 440
NII ∆: -466
0
-300 -200 -100 0 100 200 300
1 Yr Fwd Rates
Avg Mar '10
FF: 0.61%
10-Y: 3.16%
NII ∆: -553
-100
FF: 0.00%
10-Y: 3.16%
NII ∆: -91
NII ∆: -450
-200 Curve Steepeners
FF: 0.00%
10-Y: 2.16%
NII ∆: 4
-300
Change in 10-yr Swap
30
31. Bank of America
NII Sensitivity on a Managed Basis
First Rolling 12 Months
December 31, 2008
300
Year 1 FF: 2.75%
10-Y: 3.80%
NII ∆: -560
200
Curve Flatteners NII ∆: -25
FF: 1.75%
10-Y: 2.80%
NII ∆: -545
NII ∆: 144
100
Stable
FF: 0.25%
10-Y: 2.56%
NII ∆: -1,709 FF: 0.75%
FF: 0.75%
Change in Fed Funds
10-Y: 3.80%
10-Y: 1.80%
NII ∆: 698
NII ∆: -638
0
-300 -200 -100 0 100 200 300
1 Yr Fwd Rates
Avg Dec '09
FF: 0.75%
10-Y: 2.80%
NII ∆: -186
-100
FF: 0.00%
10-Y: 2.80%
NII ∆: 453
NII ∆: -102 -200 Curve Steepeners
FF: 0.00%
10-Y: 1.80%
NII ∆: 519
-300
Change in 10-yr Swap
31
32. Capital Strengthened
• Tier 1 Capital Ratio ended the quarter at 10.1%
Tier 1 common as % of RWA ended at 4.49%
–
• Tangible common equity ratio ended at 3.13%
Tangible common equity as percent of RWA is 4.11%
–
Key Capital Ratios 1
3/31/2009 12/31/2008 Inc (Dec)
Tier 1 10.1% 9.2% 94 bps
Tier 1 Common / RWA 4.5% 4.8% (31) bps
Tangible Common Equity/ RWA 4.1% 3.8% 27 bps
Total Equity / Assets 10.3% 9.7% 58 bps
Common / Assets 7.2% 7.7% (50) bps
Tangible Equity/Assets 6.4% 5.1% 131 bps
Tangible Common Equity/ Tang. Assets 3.1% 2.9% 20 bps
1 Excludes the government agreement in principle to provide protection against unusually large losses on
approximately $118 billion of financial instruments
32
33. Liquidity Enhanced
• Liquidity position has been strengthened significantly during the quarter through balance
sheet management actions as well as utilization of government funding facilities
Cash levels increased $140 billion from 4Q08 level
–
1Q09 4Q08 Change
Cash and Cash Equivalents $ 173,460 $ 32,857 $ 140,603
Time to required funding increased to top of target range at 27 months
–
1Q09 4Q08 Change
Time to Required Funding 27 months 23 months 4 months
Deposit levels increased
–
1Q09 4Q08 Change
Total Deposits $ 953,508 $ 882,997 $ 70,511
33
34. Conclusions
• Environment remains challenging
– Credit costs reflect economic environment
• Earnings benefitting from business model changes
– Market based business growth benefitting from Merrill Lynch platform
– Interest rate environment aiding growth from adding Countrywide platform
• Integration of acquisitions is progressing well
• Actions taken during first quarter to strengthen balance sheet
34
36. Bank of America/Merrill Lynch
Consolidated Statement of Income – 1Q09
Bank of America Consolidated Intercompany
1
(excluding Merrill) Merrill Lynch & Co. Eliminations Consolidated
Net interest income $ 11,752 $ 743 $ 2 $ 12,497
Noninterest income
Investment and brokerage services 839 2,124 - 2,963
Investment banking income 457 606 (8) 1,055
Equity investment income (loss) 1,474 (272) - 1,202
Trading account profits 1,490 3,783 (72) 5,201
Mortgage banking income 3,241 73 - 3,314
Other income 6,545 2,920 61 9,526
Total noninterest income 14,046 9,234 (19) 23,261
Total revenue, net of interest expense 25,798 9,977 (17) 35,758
Provision for credit losses 13,362 18 - 13,380
Noninterest expense
Personnel 5,596 3,172 - 8,768
Other operating 6,717 1,534 (17) 8,234
Total noninterest expense 12,313 4,706 (17) 17,002
Income before income taxes 123 5,253 - 5,376
2
Income tax expense (460) 1,589 - 1,129
Net income $ 583 $ 3,664 $ - $ 4,247
1 Does not include certain merger related costs, revenue opportunities and cost savings which were realized in Bank of
America legal entities
2 Includes certain adjustments made in consolidation
36
